Colorado Legislative Council Staff

STATE and LOCAL

CONDITIONAL FISCAL NOTE

TABOR Refund Impact

 State General Fund Revenue and Expenditure Impact

Local Revenue and Expenditure Impact

Drafting Number:

Prime Sponsor(s):

LLS 98-301

Rep. Taylor

Date:

Bill Status:

Fiscal Analyst:

January 24, 1998

House Local Government

Steve Tammeus (866-2756)

 

TITLE:            CONCERNING THE CREATION OF LOCAL MARKETING DISTRICTS.


Summary of Legislation


STATE FISCAL IMPACT SUMMARY

FY 1998/99

FY 1999/2000

State Revenues

General Fund - Department of Revenue

Other Fund


Minimal Tax Collection and Enforcement Revenue

State Expenditures

General Fund - Department of Revenue

Other Fund


Minimal Tax Collection and Enforcement Costs

FTE Position Change

None

None

Local Government Impact — Authorizes local governing bodies to establish marketing districts to levy and collect a marketing and promotion tax, and provide marketing and tourism services.


            This bill creates the “Local Marketing District Act” and authorizes the governing body of local governments to establish, by petition, one or more marketing districts with the authority to levy a marketing and promotion tax on the purchase price for rooms or accommodations as included in the definitions of “Sale” in Section 39-26-102 (11), C.R.S. The tax shall be collected, administered, and enforced by the Department of Revenue in the same manner as the Colorado state sales tax per the provisions of Section 29-2-106, C.R.S. Other provisions of the bill regard the following:

 

               procedures for a governing body, or a combination of governing bodies, to establish a local marketing district by petition;

               requirements for the establishment of a local marketing district board of directors;

               duties, terms, and responsibilities of the board;

               boundaries and properties of any proposed district;

               general powers of the district;

               requirements for public hearings;

               requirements and procedures for public elections;

               bonding, or cash deposit, requirements to cover all expenses connected with the hearings and election activities;

               requirements for the district to develop and submit an annual operating plan to the clerk(s) of the local government(s);

               requirements to specify the tax to be collected in the petition organizing the district;

               requirements for the district to pay the costs incurred by each local government in conducting the public hearings and elections;

               district bond issues;

               judicial examinations; and

               procedures for district dissolution.


            The bill authorizes the Department of Revenue to retain up to a maximum of three and one-third percent of the amount of tax collected for actual and necessary costs incurred in the collection of the tax. The amount retained is to be credited to the General Fund and shall be subject to appropriation to the department.


            The bill requires any person or entity providing rooms or accommodations to be liable for the payment of any tax levied by the district.


            The bill will become effective September 1, 1998, or on the day following the ninety-day period after adjournment sine die of the General Assembly, or on the date of the official declaration of the vote of the people as proclaimed by the Governor, if a referendum petition is filed pursuant to Article V, Section 1 (3) of the State Constitution.


            This bill will affect state and local government revenue and expenditures if any local governing body elects to establish a local marketing district. Therefore, the bill is assessed as having a conditional state and local fiscal impact.



TABOR Refund Impact


            Section 20 of Article X of the Colorado Constitution, limits the maximum annual percentage increase in state fiscal year spending. Once total state revenue from all sources that are not specifically excluded from fiscal year spending exceeds these limits for the fiscal year, the state constitution requires that the excess shall be refunded in the next fiscal year unless voters approve a revenue change as an offset. Based on the current Legislative Council economic forecast, it is projected that the state will be in a TABOR refund position during each of the next five fiscal years. Any increase or decrease in state revenue from changes in fees, fines, licenses, or other revenue sources will affect the amount of the state revenue to be refunded.



State Revenues


            This bill requires the Department of Revenue to administer the collection and enforcement of the marketing and promotion tax in all marketing districts that would be established in the state. The department is authorized to retain up to a maximum of three and one-third percent of the amount of tax collected for actual and necessary costs incurred in the collection and enforcement of the tax.


            The amount retained is to be credited to the General Fund and shall be subject to appropriation to the department. The amount of this General Fund revenue is dependent upon the number of districts established in the state and the amount of marketing and promotion tax collected within each district.

State Expenditures


            The bill requires the Department of Revenue to administer, collect, and enforce the imposition of lodging taxes within the districts that are established in the state. The department would be required to establish a new tax code for each new district, modify the existing lodging tax form to designate a tax code for the new district, and re-program (400 hours) computer systems to incorporate new tax codes for each district. The department will be able to absorb these costs within existing resources and will require no new appropriations for FY 1998-99.


            However, if a new marketing district is authorized to establish and levy an additional sales tax, the department would be required to establish a new sales tax account for every business within the district. Additionally, if a newly formed district lies both within and outside the existing RTD district, the department will be required to conduct additional tax audits. The department may not be able to absorb any of these additional associated costs.


            The bill allows the board of directors of the marketing district to file for a judicial review in district court. The Judicial Branch anticipates a minimal number of new cases as a result of this bill and believes any associated costs, if any, can be absorbed within existing resources.



Local Government Impact


            This bill allows any local government governing body to establish a local marketing district by petition. The bill provides that the marketing district is to bear all costs in the establishment and administration of the district. The bill authorizes the district to levy a marketing and promotion tax, “ in addition to any other means of providing revenue for a district”. The bill authorizes the district to provide promotional and marketing services; coordinate tourism promotion activities; and support business recruitment, management, and development activities.



Spending Authority


            This fiscal note would imply no new state spending authority or appropriations are required for FY 1998-99 to implement the provisions of the bill.



Departments Contacted


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